from bloomberg world headquarters in new york, good afternoon. i am alix steel. here is what we're watching at this hour. like the situation after the human crisis. bank of japan governor is not worried. he says even if china's economy is down more, there will be no global recession. he is not alone, black rock larry fink says he is advising people to buy. on theg of buying addict, gene munster says apple shares are about to pop. apples why he expects shares to go up 50% by the end of summer. for more on today's activity, going to the markets desk.

we are still in rally mode, but we are off the highs of the session. the s&p is up by about 1.3%. the dow off i've .8%. the nasdaq up the most by 1.9% or so. we are definitely off of the session highs. the s&p, 1894. the dow hovering around 16,000 mark. we were as high as 1.35. the nasdaq down 20 or 30 points. taking a look at what has been pushing the rally. that's a horse has been the energy sector. coming into the bloomberg terminal, the s&p health currently in the green. industrial had been slipping into the red. .ight now marginal energies up 2.2%. we are off the session highs.

4.7%. was as high as taking a look at crude. crude enjoying the biggest two-day rally since 2009. we are near our session highs, up by about 7%. crudeday we did see wti up by about 6% or so. we are above the $30 mark we hit earlier this morning. .ow we are up by 7% or so taking a look at the oil majors. this is how they are performing. they are also off at session highs. these earlier were up by 2%. chevron up by about 1.3%. schlumberger higher by 3%. alix: despite the fact that they will cut more jobs. people liking the dividend. aside from oil-related names, tech is leaving the way.

-- leading the way. >> apple is leading the way higher. this is after two. analyst's no iphone salestes. around the mid 140 range. they expect low 50 million range. piper jaffray says the share price dropping by 50% when the iphone seven comes out. alix: we will talk with him later on in the hour. now i want to check in on the bloomberg first word news. mark crumpton has more from the news desk. mark: the blue -- blizzard menacing the eastern united states could frank near the top 10 to ever hit the region that, according to the national weather service. more than two feet for washington. a foot for philadelphia, and eight inches to a foot in new york. some roads in southwest virginia

are already seeing it. in conditions at the storm moves north. an american to arrest from ohio is under arrest in north korea. the university of virginia's to do is accused of plotting against the government. this was reported earlier this month. egypt cracking down on defense in advance of the arab spring uprising. expressing concerns the marched withill be protest. they have arrested a number of activists accused of planning demonstrations. donald trump is out with his first attack ad aimed at rival ted cruz. called an inconsistent politician who once supported allowing the millions of all living in the country illegally to remain. crews responded by describing trumps position as similar to amnesty because it would allow many deported people to return you legally.

>> global news 24 hour a day powered by 2400 journalists and more than 1500 news bureaus across the world. we continue coverage of the world economic forum in. posts. bank of japan governor spoke to andcine -- francine lacqua asked him where he sees the biggest risk, particularly in china. to me, the economy is gradually slowing down. i do not think the chinese economy is faced with a cold, hard landing or anything like that. 6%-7%, which still is quite respective. the growth rate is slowing down, even in china. it is very gradual. huge policynt has

space to deal with any kind of economic recession or anything like that. i am relatively optimistic about the short-term prospects of the chinese economy. marketsglobal financial have faced a kind of turmoil, but it is not like the situation immediately after the lehman crisis, because that started in the u.s., which is has the biggest financial sector. that country has suffered from the lehman crisis. that affected the global economy through the dollar. i do not think, even if china slowed down a little bit, and even if the oil producers and

developing countries, the growth thinklowed down, i do not there is any sort of global financial crisis. how worried are you about deflationary pressures? >> i think that is a real risk. rate everywhere is a slowdown. orlation rate in japan europe, inflation rates are close to zero. this, theude exclusion rate is 1.1 for -- 1.1%, which is not so bad. i do not think the global economy is on the brink of sharp

deflation. it declined because of sharply declined oil prices. alix: that was the bank of japan governor at the world economic forum in dollars. coming up in the next 20 minutes, china is transitioning to a consumer-driven economy. recent that's show it will take longer than it did. markets in turmoil but the current flight does not compare to 2008. nouriel roubini will tell us what the big difference is. lack rock ceo larry fink sees a buying opportunity. he says markets are poised to gain over the next year.

alix: welcome back to bloomberg markets. i am alex neil. time for a look at the biggest business stories in the news. -- i am alix steel. atrth-quarter profit american express dropped. this has been largely due to berkshire hathaway. his stake is down about $1 billion today. missingelectric fourth-quarter revenue sales. plunging in the oil and renewable energy unit. just a milk is in the process of reshaping the company focusing on industrial manufacturing and analytics. offwhile, he is selling

finance and consumer finance operations. at least six angst targeted into libor breaking are in settlement talks with the country's regulator. that is according to people familiar. a settlement would mean nearly all global investigations into rate rigging are nearing an end. that is your bloomberg business flash. now taking a look at company movers. free stocks really missing out on the rally. this is because of earnings. --first, starboard starbucks. it missed the first-quarter profit estimates. in part, because of the paris terror -- because of the terror attacks. shares down 7%. this is off at the close. it had been as low as 2.7%. coo kevin johnson says they

are seeing a dramatic decline in consumer and tourist activity in europe. same-store sales only a five 1%. they were expecting 4.5% rise. over in china they are looking ina rise of 5% for sale actuality. 6.1% there. , fourth quarter sales missed estimates. right now down by about 2.5%. they were expecting $33.3 billion in sales. that is an estimate of 39.9 billion dollars. basically $2 billion less than they expected. the seventh time in the past eight quarters that they have missed the revenue target. fourth-quarter missed estimates as well. right now scraping the bottom, just barely off of the lows. the market down by 12%. year to date they are down on

the order of about 20%. this is the biggest fault we are seeing since the financial crisis. the reason for this is fourth-quarter profit fell 38%. the ceo says the performance we are discussing is not what you or i are accustomed to and operating in a new reality. they are talking about cutting costs by $1 billion this year and doing restructuring. we all know china is trying to transition the economy to consumption versus manufacturing lead. wrote thef fundamental indicators of a change in the shape of the chinese economy would be a fall in savings and investment and rise in consumption. that is not happening. wasting debt fueled investment. joining us now is the head of emerging markets.

>> i think the biggest problem is this, the debt levers and china are still growing rapidly. even though the numbers for debt growth have come off the board, grewyear credit in china twice as fast as the economy. i think that is the fundamental problem out there, as long as that is growing so rapidly in china, it is hard to feel comfortable the economy is moving to any new normal. we do not know what the new normal is with new debt level so high. the chart.shows the ball of it is in the local currency. what is the tipping point here? bulk of it here is the local currency. months, 2000t six

15, some estimates put it $750 billion left the country in terms of capital. give a huge amount of money coming out of china. that is really putting pressure on the financial system because thes liquidity happening in financial system was so much money leaving the system and the chinese government is not being able to cut interest rates or cut the reserve requirements because of the amount of money flowing out of the country. to looke two things for, chinese growth is going to stabilize any point in time. the debt levels need to stabilize. as long as growth is being funding, more and more debt is being taken. the second very important part is they have to give us the session with a growth target that they want to meet this every single quarter skin that is leading to wrong policy choices and the illusion about

what is the real growth in china. very few believe the economy is growing at a 6.7% base. alix: why do we care about that in the u.s. gekko goldman sachs had a point that it is not necessarily the logistics. the exposure is quite low. we have that chart if we can go ahead and pull that up. 2% rely on china. ?care here ? the world has never mattered as much as it matters now for the american economy. the share of the rest of the world is much higher than it used to be. 20 years ago the american economy was one third of total economic output. today about 23%. and what is happening in china has an effect on the rest of the world. you speak about australia, you speak about europe.

there is a negative feedback loop from what is happening in china. we are living in a much world -- much more interconnected world today. this comes back to the american economy. at the last half of 2015, we've seen evidence on how the manufacturing sector has gotten hit because of the global slowdown in trade and manufacturing. >> and the strong dollar has contributed to that. let's this is a much more globalized world. 2% 3% here. does not tell you what the full picture is and how this comes back to the american economy. >> bloomberg spoke to george soros and what he thought about china. >> the china -- the chinese theed too long to address growth model they have to adopt from.

export led to domestic life. landing is practically unavoidable. kiss that mean we're looking at a global recession of in end of the day? >> not 2008 because that is very extreme scenario but a minor version. that means double growth slips below 2%. that has been the historical definition of a global recession. we got that in 2001 and 1991. a much minor version 2008. very significant spots of the are not growing at all or are contracting like russia and brazil. we are now in the eight year of global economic expansion. has alwaysy there been a global recession once every eight years or so.

china has been the single largest contributor of global growth over the past five years. china is growing way below what it was a decade ago or even 3-4 years ago. the possibility of a mild recession is quite high. officiated very much. head of global equity of morgan stanley. thank you very much for joining us. >> prices at current level are not sustainable. this will eventually be a short upside. alix: where does economist muriel roubini see prices going? we will give you his 2016 prediction. ♪

alix: roubini global economic chairman nouriel roubini telecom told bloomberg markets may tumble earlier this year. but demanding the cousin of the weather and slow growth in china and emerging-market u.s. would suggest oil prices and go lower from current prices. if they're going to go lower, i do not think we have to stay there for a couple of reasons. another round of massive reduction. this would imply future capacity will shift. produce profitably and cut back in production. i would say for the market to go lower from the current level but year and would justify a third. is the unique political

economics that is russia. they have to reduce the budget deficit. this is the same on the export side. they are prepared for all sites being the word. from a market point of view, russia is ok. the problem is russia is not the macro side. potential growth is barely 1% because the actual reform is the economy dominated. is there an ideal price for oil ago you are saying russia can behold -- withhold this.

this.e been talking about at the same time, lower oil prices is beneficial to the western economy. what is the ideal price? likes certainly prices are current levels. prices are well above 80% or 90% per barrel. over the medium-term, oil prices around 50-60 is good news for the consumers. that was nouriel roubini. a quick check in here on the markets. i want to take a look at the fix. the fix is down 12%. this is up 30%. the fear factor not as strong.

look -- if of your you take a year look at the fix, we are nowhere near the level we saw in august. there is so much fear and panic in the market. were like half of that during the last turmoil. the reason why i wanted to point that out is it did fall below that it did make in august. we have since bounced below that. the fear in the market did not ix theate through the v way the stock selling did if you compare it to the august levels. much more coming up. black rock ceo larry fink is buying despite the turmoil.

alix: from bloomberg world headquarters in new york, welcome back to bloomberg markets. i'm alix steel. starting with the headlines.

mark crumpton has more. forecasters are promising a storm for the record books. a blizzard is taking aim at the east coast of the united states and they got more than two feet of snow on washington and new york make it up to a foot by tomorrow. at least 50 million people could be affected. already air travel good to become a nightmare. 5000 57 canceled for today and tomorrow. david cameron may reach a deal on your form -- reform by tomorrow. the main sticking points, cameron's insistence that the u.k. be allowed to restrict welfare payments for you -- eu workers. according to the financial times, president putin set the head of military intelligence -- intelligence to deliver the message. president assad angrily refused.

president putin is the most powerful protector. the u.s. had seen the removal as theecondition for ending fighting in syria. human remains have been found at the arizona crash site where a student highlight from taiwan went down. this occurred yesterday morning weree pilot and instructor engaged in air to air combat training. global news 24 hours a day from the bloomberg first word desk, i am mark crumpton. back to you. alix: chinese officials are at the world economic warm in that -- da -- that most. even though there is no intention to devalue again, gary cohen says it will be value in the next six months. you listen to what china has told you the past 10 years,

they are doing exactly what they told you they would do. they started on a plan to build out the infrastructure of their cities. they spent enormous amounts of money, capital on building infrastructure. when they were boarding -- building cities and railroads, you saw that. it was very tangible and you saw it in the economy. at 10 growing the economy or 12% from a low base. once they built all of the infrastructure, they told you they work went to migrate hundreds of millions of people into the city and they were going to check that -- take the chinese and making them consumers. >> but with what money? >> they have taken the people to the cities. they have made then consumers. they start spending money. it is called consumer

discretionary spending. this does not show up as predictable as government investment. one problem in the meantime, fx reserves are eroding half a trillion every six months and possibly accelerating. orthere faced with the value close the capital account. they have choices. they are clearly evolving their economy to a consumer driven economy. in the next six months they're going to have to do something. next six months, they will have to do something. they told up the surplus account . it is undeniably going down. you can see it in the numbers. they may take action to deal with that. do i believe they will end up devaluing the currency gekko i --i do believe they

will end up devaluing the currency. tephanie: we see them leaning and hard. alle are talking to clients day long about what the opportunities are, the risks, and the rewards are to be invested in china and what we think the long-term opportunities are are the clients today and what they will be for the future. they are going to devalue, how does that change the outlook? we have investing clients, corporate's that a look into growing their business around the world. we have chinese client that are looking to invest at of and into other parts around the world. we are in a position to provide unique advice. the advice weng

think best suits their needs. ofx: china is faring much the blame for the loss of billions of dollars in markets around the world. larry fink says raw emotions are really more at fault. he says panic has in taking over investor sentiment. he predicts this will ultimately be a positive year for stocks. the markets trade on a lot of emotion. we should not pay attention to the daily swings. overall i think we came in in really questioning the large assumptions. fourrically we're three or historical events per year. we probably had one doesn't. everywhere you look you have uncertainty. then you have the collapse in oil prices in december that bring you down to a little below 30%.

the market is so nearsighted. the market sees the problems that are so immediate. do not see cheaper heating .nd cheaper energy costs that money will be put back into the economy. we do not see that. it is so incremental. this is why i think the market may have digestion problems. i think over the course of the next year we will see a higher market. global gdp will be around 3%. that worried. i think if you add up all of the problems, the most significant the understanding oil has significant issues with countries. then, we have seen some very large inconsistencies out of the

chinese leadership. it is a very important economy. the lack of a cohesive message has become very unsettled. was thethat probably most unsettled component of why we have this huge capitulation. i believe this is a capitulation, not a bear market. you are so right, or gets our emotional. does it feel to you right now with what we saw transpired yesterday with the dow, futures of 200 points that we sold the bottom? we bled inbelieve the street. i still believe the markets need to digest lower oil prices. i would say to any investor, you .uy the dips

this is a real capitulation. it is not the violence of the move. it is so fast and swift. he was based on emotion, but the better investors across the board use the emotion to buy. when you two of the things i learned. in the first week of the year we witnessed some large official institution selling. many people saw it. that was an unsettled part and reminded everyone where we are. starting wednesday we started .eeing buyers that began three stabilization of the markets today. erik: is that a better sign than retail money? >> retail money you would expect over the short, by the corrections, you would expect selling.

it takes longer for retail to come back into the market. that is why i keep telling walk awayou cannot from the movements. you see these as opportunities. these are great opportunities, and that is what we are seeing. alix: that was blackrock and ceo and -- that was chairman, larry fink. the pullback in apple over the past month has made this talk of buying opportunity. will the iphone seven launch be enough to restore confidence in investors. more stimulus measures could be on the way. will the intended result be sustainable? we would hear from the governor of the turkish bank live on his strategies dealing with the global market rally.

alix: you are watching bloomberg . this is your global business report. optimism from german software gdp. goldman sachs is changing course on the euro outlook.

first, getting started with comments from the bank of japan governor in davos. meeting of the gdp is next week and downplayed the turmoil and china. >> even with china down a little bit and even if oil producers and urban countries, the growth rate slightly slow down, i do not think there is any global financial crisis like the situation after the lehman crisis. raised theas forecast for next year. it has been moving more customers to the business software suite and generating more revenue from cloud computing products. more from the world economic forum. george sarah spoke to bloomberg thursday saying he expects a hard landing in china, but the ceo of credits we disagrees. positive i doam

not see a hard landing. the market has to take -- except it is possible. this is part of the functioning of the market. is making an sachs u-turn on the euro. for the second time in six we goldman is revising the forecast for the currency but now there is again. they predict the euro will drop after making the call to greg european central bank. how much is having a search bar on the iphone work to google? $1 billion. that is what google paid apple in 2015. the figure came out in the transcript against the copyright. apple gets cut through the search bar. this has been your google report. for more stories, go to bloomberg.com.

now, going over to abigail doolittle live from the nasdaq where she has the latest on tech stocks. >> in the context of the two-day toly, our team reached out the head of technical analysis at oppenheimer who got this year's correction right calling for a last year. now he says relative to the s&p 500 that we are seeing a bottom but not sure if it is the bottom. neither way he likes tech into the second half including microsoft and facebook. otherng of facebook, bullish comment saying that facebook is positive with several catalysts including instagram and the potential expansion into china. oppenheimer saying facebook should put a very strong fourth-quarter results and the stock should be thought. performer,the worst percentage performer in the nasdaq 100. it really stands out in the rally and risk on context.

they put up a solid quarter with solid numbers. it suggest weakness. the stock is struggling to trade on the 200 day moving average. you, abigail doolittle. shares of apple are rallying, up around 3%. this is been a very tough start to the year. down nearly 3%. af 29 from the peak does month ago. gene munster says the rally has just begun. he joins us now from minneapolis. -- call.old carl >> the the thesis? historical trading over the past year. we are not at the historical historicalar the lows. that gives us confidence to be

positive. to your point about the 50% upside, historically the multiple expands after the march quarter. the reason is investors are able to look forward to what is coming. office getting busier -- easier into the second half. the iphone sixs cycle was pretty disappointing. why do you have confidence the iphone seven will be better gekk? typically when they have software releases, that does better. right now there are global market share that is room to grow higher.

our believe ultimately if they can capitalize on traditionally likewe call full cycle, six or seven iphone seven, if they can capitalize on the hardware improvement, gain market share, that should be good for revenue growth. alix: estimates for next quarter look pretty rough. iphone will go negative for the 10% yeare ever, down on year. do you feel the bad news is now totally priced in? feel it is. that is the best we are making. a lot of investors feel that is not the case. our take from meeting with investors is it is priced in and they feel they can lower the numbers, died below the street and the stock and react positively tuesday. so much beaten down, you cannot help but to rally after that. paidberg reported google $1 billion to apple to keep the

search bar on the iphone. what do you think that $1 billion price tag. they probably generated 3 billion in revenue from that. that is a 30% tax. this is more than typical acquisition cost. this is rumored between 50%. if you would ask me to guess before i saw the number, i would guess closer to 1.5 billion. alix: so not as bad as we would have thought. >> what is the breaking point for the two of them. >> probably five years down the road. the reason it will take that long is apple needs to improve the current search and work better with bing.

siri a question, she is using bing. embracing it and the other services, would compromise the user experience and would blow up on apple. alix: thank you. great to have you. a big, bold: apple with 50% upside by september. coming up, focusing on global monetary policy. what stimulus measures could be on the horizon. ♪

alix: welcome the two bloomberg markets. turning now to global policy. the bank of japan will be more and adjust quantitative easing program, but there is a risk. the leadingext is

director of global capital group. what is the risk if we get more quantitative easing from the easing fromoj -- the doj and ecb? many of theis people we are trying to put on short positions will start to build that up again and more .olatility there is a very short-term effect like you are seeing right now. it bounds in equity and oil .ecause of technical once it is there, markets is tentative is allowed to again. that seems to be repeating itself and has become more prevalent over the past few times we have had further expansion of wanted hated easing. in addition, if one central bank starts to do quantitative easing, there is more to be followed. not just the bank of japan but

may be the central bank in sweden or elsewhere in china. if all of them do it at the same becomes lessect and less over time, and that is the risk. alix: you have speculators and qe as well. is that why they cannot hit the 2% inflation target no matter how hard they tried? is correct. each time you apply the quantitative easing, you are dealing with forces in the market. getting otherare forces coming to market. they are trying to take an opposing position to what you're trying to do. therefore, the quantitative easing program becomes less and less effective. skepticismion is whether you should really rely on something like quantitative

easing and they will adjust the position accordingly, too. that willmething continue to go on, the becomes less and less effective over time and reduces volatility. are we seeing something similar as the fed embarks on the hiking cycle gekko the fed does not really want the dollar high, so that crimps what they are able to do, too. >> i would agree with that. the other fact is you are getting too strong of a dollar. this has been going on since 2014. you are getting too strong of a dollar. we just went through a dramatic decline in the oil price, which the dollar has contributed over 40% from that and supply factors there. adjusting the call list -- the currency machine which

affects the global economy by markets. u.s. having speculators who are for running central banks that posing effect that they are after. as a result, you deal with a really difficult environment. i am afraid this will be very short-lived. alix: if you look at market expectations, they are so far below it. it is like what meets up with what? the market has so far been right. probably one more time this year. therefore, speculators. managingat stuff, director at leader capital in los angeles. we will be right back. ♪

alix:'s googler grow again in hong kong, welcome to -- it is 2:00 a.m. in hong kong. welcome to "bloomberg markets."

from bloomberg world headquarters in new york, good afternoon. i'm alix steel. inflation in turkey is soaring, but the country's central bank refuses to budge interest rates. with the lear tanking, how long can it hold out? will prices rising sharply today, what's behind the price reversal? ast of us remember being millionaire. but one of the odds of actually becoming one? why the deck is stacked against so many americans. i want to check in on the bloomberg first world news this morning. mark crumpton more from the news desk. mark: some 5000 flights already been canceled ahead of today's big snowstorm. all flights into and out of philadelphia international airport have been canceled for saturday when blizzard conditions are expected to be in

full swing. forecasters say the storm could be one of the 10 worst ever hit the eastern seaboard of the u.s.. about 50 million people are in the storm's path. john kerry says the worlds on the cusp of a conflict with iran before nuclear weapons deal was signed. the secretary of state spoke today at the world economic forum. john kerry: i can't tell you how many leaders said you have to bomb them. that's the way he will solve this problem. now, because of the joint comprehensive plan of action, we formally certified this weekend iran's path to building a bomb has been closed off. kerrymeanwhile, secretary blames bashar al-assad for causing what he calls the worst humanitarian disaster of our times. iraq's prime minister is also in dollars and says there is no political motivation behind the

recent abduction of three americans in baghdad. taken byhe men were criminal gangs, and that there has been no demand for ransom. meanwhile, the u.s. embassy in baghdad has confirmed only that an unspecified number of americans are missing. to revive his ailing campaign, republican candidate jeb bush hasn't listed his mom in a new ad, the former first lady, barbara bush praises her sons'leadership skills. she also says former president jed -- george w. bush will join him on the campaign trail. news, 24 hours a day from the bloomberg first word desk, i'm mark crumpton. central banks front of the economy without using interest rates. the times of change. is it time for a new strategy? let's head over to doorposts --

davos. john is standing by with the head of the turkish bank. john: we have the turkish ambassador. you have it tough job. most people agree of a very tough job. market participants don't see you using interest rates to address what's happening with the currency anymore. i wonder what ammunition do you have at central bank to address what's happening? >> thank you. problems of turkey have been one of balanced growth. , andk over as the governor it was approaching 10% of gdp. the first problem to address has been the external balance. years,out the last four we have issued a great success

by using macro credential tools and prudent fiscal policy to bring the differences down to below 4% this year. that's a big success. it's the first obstacle against this inflation. byt's being taken care of respecting the consumer. it will be the first year, this year, where the consumers income will grow. that's a great success story. the growth rate has been quite remarkable. given what's happening in the emerging market universe, turkish growth stood up pretty well. that's supporting the currency, interesting way. instruments and tight fiscal policy has reduce the burden on the adjustment of interest rates. we did not need to be very aggressive regarding the rates.

to can go all the way up 10.75%. jon: that seems to be enough. inflation is still stubbornly above target. did you discuss this at the last meeting? erdem basci: we are discussing the use of all of the instruments. we have more than one, and we introduce new ones in the august roadmap. judgment to find the best policy combinations. what will the best, see -- the best policy combination, given the inflation? basically, high inflation this foodmainly came from prices and some impact of the previous depreciation. therefore, the impact from the currency is fading away.

there will be less and less impact. but the main impact of the minimum wage and food prices will be visible. our baseline scenario, i will present it on tuesday. next week. conferencee a press regarding the inflation report. scenario, thee peak of inflation will be seen in the first quarter, most likely in january. the key is to take inflation down to 7.5%. innext year, and back to 5% 2018. that requires a lot of effort. it has to be from all dimensions. support from government regarding the food inflation, have to beside we stabilizing on effective credentials and support for financial stability.

you said rates were tight in the past. i wonder how tight they are with core inflation 70% -- 70 basis points above funding. why do you think monetary policy is tighter? erdem basci: when you look at credit,nd currency, on we have issued that objective. consumer loan growth is approaching single-digit levels. there comfortably at around 5%. jon: have you achieved your goals? --em basci: credit goes growth is around 10%. see that is sustainable. our agents consider this very carefully. it's a three-dimensional difference. we have all the infrastructure for the instruments, and want to use them, they work, basically. 18, turkey has been

one of the best performers in the emerging market universe. close to india, i would say. it shows that it really works right now. that's going to take away the pressure is coming from the currency. that's the excitation. we need communication, that's why i'm here. jon: at the moment, market participants don't think anything will happen while you are the government -- the governor of the central bank. is that an appropriate way of viewing the bank come in action until you leave? erdem basci: institutions are the key. turkey is very best central bank of turkey is a good institution. we have over 100 phd's working in research and other department's. they are bright, young people. we have a lot of experience regarding the stuff in the markets to permit. it's a strong institution. basically, the continuity will come from our policies that are stated.

and then the rest will follow. i've probably said that if i'm offered the job, i will accept it. the rest is up to the decision-makers. jon: moore to participate or's would like to know if you're moving away to a single rate policy. you give us an idea that would giv happen pretty soon. can you give us some guidance? erdem basci: look at our communication, starting from the july inflation report. the communication has been very consistent. this is a very valuable that is service welder in the eurozone debt crisis and other episodes. because it gives you the flex ability to tighten the policy. temporarily, in the face of extreme market movements, globally. it's improved its efficiency. basicallyteps will be after the normalization of the federal reserve's monetary policy, we can just switch it

back to a single short-term interest rate. that's ok. what we did is, once we taken and everyone feels confident that the central bank of turkey minimize the impact of inflation, then we will be --dy to narrow [indiscernible] right now, we are using it successfully. version i'm getting is the burden of this relies on the government. my takeaway, if i was an investor would be that monetary policy and answers rates will not be used as a tool to contain inflation rate. erdem basci: we are using it. right now, the average rate is 9%. the marginal rate is it 10.75%. that's tight enough to stabilize. jon: is that the ceiling for the

turkish central bank? erdem basci: the proof of the pudding is in the eating. look at the numbers from august. a freshelieve it hit low. erdem basci: on the currency working,n credit, it's and currency, it's working. the rest is expectations. expectations determined to medications policy. that's what we've gotten from these meetings. jon: in the spring of last year, there was some tension between the governments and monetary policy, very public tension. and pressure on the central bank not to hike interest rates, to contain inflation. as it had an effect on the central bank's credibility and independence as far as you are concerned? erdem basci: they did haveerdem basci: some impact on that issue. but if you look at it, it was

the proof of independence of the central bank. all, we always took the right action, and we did get a lot of criticism, sometimes, not always, from the ministers are politicians. but that is proof of independence. that's the way to see it. jon: governor, thank you. i'm going to throw things back to you at the swiss economic world form. alix: i don't envy you. thank you, jonathan ferro. much more coming up on "bloomberg markets." the dow is now currently up by 147 points. we will be right back. ♪

alix: welcome back to "bloomberg markets." i'm alix steel.

ramy inocencio has a check on company movers digging into the top performers. ramy: looking at top performers in the text here, i want to take a look at apple and microsoft. on the s&p, the tech sector is the second-best performer. looking at apple, up by 4%. wois is off of apple getting t analyst notes, saying they expect shipment of iphones to be alone -- around the mid-50 million mark. they also say shares could rally by the time the new iphone comes out in september. microsoft says it's the stock pick, one of the stock picks of 2016 out of 70, saying microsoft 5% grow, operating income by , leveraging windows server and putting a price target of $64 over the next few months.

afteroil rallying slumping to 12 year lows. how can you actually play oil? we're going to ask eric balchunas. ats kind of scare me. -- etf's kind of scare me. eric: when you go to the futures market, you're going to be responsible for those features. the convenience is easy, you buy just like you buy microsoft shares. the question back to you is how long is your holding period. if you only want to play a short-term pop, you want to go to a futures tracking etf. the reason it will have the most sensitivity to a pop in crude, so this week in the last two days it's up 10%. crude is up like 13%. it's right there. over time, this will not really

work out because the rolling of the futures. in 2009, the last time to be g.i. crude headed huge year, uso was up 10%. you could get that right, but have the wrong product. that's one way to do it. uw ti is really for traders. triple leveraged velocity shares crude oil tracker. believe it or not, this thing takes an money hand over fist. it's taking in $400 million this year already, $3 billion in the last year, it only has a few hundred million dollars to show for it because it basically eats money. it up 20%. alix: i'm 95 years for retirement. one of the better long-term plays? eric: xl he is a popular one, that's the spider energy. it's 33% chevron and exxon, you're very heavy into companies. vanguard is cheaper, it's 10 basis point for vanguard energy. somethingso go to riskier like xds, the spider oil and gas equipment and services. these have a higher beta.

if there's a rebound, this could catch more. oils09, xle was up 22% on 77% rebound. xds was 60% up. it has juicier high beta stocks in there. you can go even deeper with something like frack, the unconventional oil, gas, oil refiners. all kinds of options these days to do it. check your volatility numbers before you get into any of these. alix: take a xanax. thank you, eric bell soon as. -- eric balchunas. top investors warning the markets have further to drop. but how much more downside is there? ♪

alix: welcome back to "bloomberg markets." i'm alix steel. have we rebounded from a market bottom? top investment bankers say not yet. the slowdown is likely to fall

further as investors continue to flee for safety. how have some family offices been navigating this volatility? we head over to bloomberg radio, where carol massar has how this is impacting wealth managers. carol: welcome. this is the bloomberg advantage on bloomberg radio. joining us right now is our personal finance reporter peggy collins of bloomberg news. these stories has to do with what investment managers have to say about this market environment. peggy: i've been asking a lot of advisors and looking at data in terms of overall investments and including people with 401(k) plans. as that are you seeing a lot of selling? in general, people are saying no, we are not net sellers in this market in terms of advising our clients who are families and

individuals and also in terms of the data coming back from neutral funds. -- mutual funds. serves 300 the wealthiest families in the u.s. and ran family data trades over the course of the month, and they are three to two ratio. for every three dollars they are buying to two dollars selling. they are essentially net buyers. although there is not a trend in terms of them moving in tandem into one specific sector where they are buying. carol: interesting. we are not seeing necessarily everyone running for the exits. we heard that from a guest yesterday who does a lot of invest in all -- institutional investors. peggy: i was talking to a financial advisor in linux, massachusetts. he was saying one of the things that is different somewhat from how people reacted in august when we saw the stock market dropped was, they are not injecting cash, generally for clients. what they are doing is buying or selling and rebalancing. that essentially means it if your asset allocation is 6040,

it's best 60% in stocks, 40% in bonds, bond prices have been going up and stock prices have been falling. your asset allocation mix may actually be off. in some cases, they are taking some gains from bonds and then buying stocks. but again, not injecting lots of cash that may have been sitting on the sidelines. carol: what about when people are saying if there's any kind of comparison to the financial crisis? we see a lot of data points that come in and harken back to that. are we hearing that in terms of the rhetoric or references to that time? peggy: one of the more interesting things around that i've heard from top investors is this -- they are, of course, watching oil prices in the currency pegs. one thing they are also watching more closely is the gap between services and manufacturing. data showing that job growth and potential profits in businesses, manufacturing businesses in the u.s. is weak. that couldfurther,

pull down the rest of the u.s. economy. that is something we are watching for. carol: we just had carl riccadonna, and i said to him we are such a service let economy, why do we give so much importance to some of the manufacturing data? because there is that trickle-down effect at a correlation that when you start to see problems in the manufacture and sector, you see it play out in the service sector. it's a very clear correlation. peggy: absolutely. a, global ciomark of ubs wealth management and also carl collarbone, who is managing partner at pittsburgh in chicago. private equityth investments, looking closely at middle-market businesses to buy or reinvested the ones they already own. people from two different vantage points who are really zeroing in on that data. carol: how often do you hear from wealth managers that you talk to, everyone says you have to have this long-term focus.

we all know about that. do they have a lot of clients who are getting nervous? do they understand the important -- the importance of having a long-term vantage point? peggy: people are hearing so much about market volatility. the group it's hardest for, if you are in a good position of having some money that you don't need right away, you can take a long-term focus is that people who are over age 70 and a half and had to take this region from their ira accounts. thatseem to be the ones advisors they are getting nervous other than others. but the good news is, it's only january. , youave to take that money have some time to see if that market comes back. peggy: you're not take away --carol: your net take away? peggy: many of them sat tight. but most of them are positioned right now to go back into the

market between now and the end of january. it's what they are saying to me. carol: because it's deep down. peggy: they are seeing better valuations. particularly looking at large cap u.s. equities again. carol: peggy, thank you. peggy: happy friday. carol: peggy collins. we going to send it back to you. alix: thank you. still ahead, oil prices bounce back today from lows this week. what is the longer-term outlook? i hear from jeff curry -- currie from goldman sachs. ♪

to "bloombergback markets." i'm alix steel. let's start with the headlines. mark crumpton has more from the news desk. mark: that storm that is taking

aim at the east coast could turn out to be one of the 10 worst ever to hit the region. washington is expected to feel the brunt of the blizzard. it may get more than two feet of snow. new york make it up to a foot. almost 5000 flights of been canceled the next two days. an american tourist from ohio was under arrest today in north korea. state-run television says university of virginia student is accused of plotting against the government. the arrest of another american on spying charges was reported earlier this month. shortly before the trial is set to start, charges have been dropped against six people arrested during a protest in ferguson, missouri. charges included resisting arrest and disorderly conduct. the arrests occurred during a protest marking the six-month anniversary of michael brown's death. brown, an unarmed black teenager, was shot and killed by a white police officer in august of 2014. the regional official with the

environmental protection agency has resigned in connection with the flint, michigan water crisis. susan had been dismissed rater of the epa region that includes flint. she has been criticized for being slow to publicize concerns that flint's water supply was contaminated with lead. global news, 24 hours a day from the bloomberg first were desk, i'm mark crumpton. alix: thank you, mark. we turn our focus now to will. earlier this week, i spoke with jeff currie, at goldman sachs. we talked about the impact of several oil price scenarios. it's still not our base case. i think a lot of that has to do with the dynamics that are in play. the $40 a barrel scenario we talked about was a financial stress point. in terms of thinking about at what price level do companies start to hit a financial constraint and adjust their behavior. we are beginning to see the impact of that around $28 a barrel. this last week we saw

significant announcements from of guiding production down. the $20 scenario is what we call operation stress. it's when the surplus begins to overwhelm the logistics of the market, such that you and up seeing a disconnect between spot prices and floor prices. night, int last february, in which the february prices disconnected from the forward pricing and cut out the cash and carry, which is an indication the surplus is breaching the system. we have both the operational stress as well as financial , somewhere around $28 a barrel. alix: you also had a note earlier in the week saying that if iran came on the market with $500,000 -- 500,000 barrels a day, it can also be a trigger for $20 oil. jeff: in terms of thinking about breaching capacity, it's difficult to pinpoint where the world is going to happen. we heard reports that you are breaching storage capacity in

places like scandinavia, europe on the product side. if you're having problems in certain parts. another good point was coke flirted with a zero price for oil. this is an indication of just don't know what to do with that oil in terms of trying to find a home for it. i want to be careful that when we think about breaching storage capacities of these operational issues, they are very indiscriminate to where it's going to happen, geographically, and what product is going to happen in, as well as the timing of it. well yes, iran just put more pressure on already oversupplied market, where it pinpoints other it's in brent or debbie g.i., more likely to be to either brent, it's still really open to debate. this getting to operational stress for some producers. is it enough to stop the slide in oil prices? are we have to go lower to get more operations?

jeff: we are in the inflection phase of the bear market. what i mean by that as we are now starting to see movements in fundamental variables. before, it was financial volatility that was not translating into much fundamental volatility. so the fact that we had companies that are now down, substantial rate deductions, the fact that we saw disconnect to cash prices, all of these are indications that we have entered a different phase of this market. the way i like to think about prices going forward is there going to be very volatile without a trend. in terms of thinking about if we are going to see this market trending down anymore, at this point, it's very unlikely. lots more volatility. 98 andto characterize 99, similar to what we are likely to see going forward. we bounced between $10 and $16 per barrel, which is a huge range on percentage basis as a market carved out upon them and created a transition. this could last six to nine months. alix: what is that bouncing

range? is being cashrrel costs, word source to create financial strain on companies trying to produce in the current environment. 40 being the cap where financial stress begins to kick in. it's as wider ranges that. they better ranges 25 to 35, but those are the two bookends. you have cash comes unwanted at 20, financial stress at 40. that's the boundary. that was jeff currie, head of global commodities research at goldman sachs. more bad news for the energy sector. high yield bond fund's posted a second largest weekly outflows and 10 months. according to bank of america, $4.9 billion was pulled from funds worldwide in the week that ended january 20. admit a lot of the pain in high-yield exley coming from energy, how to energy companies keep themselves afloat? joining us is lisa abramowicz. to beit was supposed

armageddon for these guys last spring, and then armageddon for these guys in the fall as oil prices fell and they had a lot of debt. what are they doing now? for some, it's armageddon. some of them are going bankrupt. some of them are doing debt exchanges, were basically they go out and try and get -- buy back some of their bonds at lower prices, $.50 to the dollar. and then retire it so they basically get rid of -- they restructure and can give some of the investors possibly some equity in the company. they are trying to shore up their financial situation. and drum up as much liquidity as they can to get through the next three years, so they can survive this patch of low oil prices in order to be one of the successful companies in the long run. alix: are they drawing down revolving credit? a lot of these guys didn't have a lot of wiggle room over the last few years because they have a huge evolving credit line that they haven't yet drawn on. are they drawing on it now?

big: this is one of the questions, particularly about how much risk is going to put on wall street banks. couple ofeen a companies either start to do that are talk about doing that. drewzilian mining company down $3 billion against a $5 million credit line earlier this year in order to buy back $1 billion of its debt. more they are taking on leverage by drawing down the revolving credit line. lisa: here's where energy companies, the ceos and cfos become credit traders. they have to decide ok, right now the bond market's value waiting our bonds and treating us like we're going to go bankrupt. to take advantage of that? buy back those bonds at low prices and borrow from our credit line in order to buy our bonds at distressed prices? they have to start thinking more like credit traders in order to shore up their financial situations.

chesapeake is doing something like this, suspending their dividend in order to use some of that cash to pay down the debt. lisa: which is smart. they announced today they're busily not going to pay dividend on the preferred shares in order to stave -- save $170 million and use that to repurchase some of their debt. the question is, what are they going to purchase? are they going to buy back their near-term maturity debt in order to create that runway? how are they going to navigate? this is really strategically an important time for these companies. , if they got to think do draw on their credit line, barclays analysts were suggesting that perhaps can or morgan might do the same thing. if they do, what does that mean for the banks? bank of america, wells fargo, jpmorgan, citigroup, they have already announced more than $2.5 billion in reserves they have set aside to cover their losses. how much to that stand to increase if some of these companies start drawing down on

these credit lines that have already been committed to them? alix: jeff currie and i talked about that. he was saying the market seems to be implying a 12.5% default rate for energy companies. was only 10% back in the 80's. his hypothesis is companies have a lot of operational leverage they can pull. costs are coming down, they can afford to keep producing even though oil prices are low. getting some cash, which helps them survive. it is a relative unknown. lisa: it becomes right complicated. some of these credit lines are secured by assets. how much of those assets really worth? how much were they initially worth and how much are they now worth? where are they in the capital structure of these companies? this just default rate, know how these banks are calculate all of their loss reserves, but what about the capital he may have to put against some of these credit lines? if they are drawn down from very high risk energy companies. there are a lot of considerations your that amps up

the risk. into your point, does perpetuate the leverage in the system. in a lot of these producers are not going to necessarily be squeezed out as quickly because they do have these lifelines. alix: it's fascinating. one of the biggest questions i'm hearing in the energy industry, thank you to lisa abramowicz for joining us. , search commentary bloomberg gaslight on the web. coming up on "bloomberg markets," everyone dreams of being rich. but what are your real chances of being a millionaire? we have the breakdown of your odds. adding to a global rally experiencing a second day of gains. does this continue? oil prices are squeezing saudi arabia's foreign exchange reserve. prompt concern over the nations exposure to the bond market. of america's debt to saudi arabia alone? -- does saudi arabia own? ♪

alix: welcome back to "bloomberg markets." i'm alix steel. it's time now for the bloomberg business flash, a look at the news right now. not airline pilots approved a two-year contract extension that includes a 22% pay hike and restores pay. that's according to the airline pilots association. extension was approved by 79% of the pilots that voted. united's struggle to combined workforces after its 2010 merger with continental. a big jump in sales of previously owned homes last month. existing home sales rose him must 15% in december. the most on record. for the year, more than 5.2 million homes were sold. the most since 2006. the obama administration is moving for the first time to

stop energy companies from releasing unwanted natural gas from oil wells drilled on federal land. environmentalists say the practice contributes to global warming and the interior department proposal released today would be phased in over several years. that is your business flash update. i want to head over to the market desk where ramy inocencio has the latest on the markets. ramy: right now, we are headed back up to session highs. the sick a look at where we are right now. the s&p 500 is up 1.8%. the dow up by more than 1%, the nasdaq up by 2.25%. it a lot of the support has to do with what's happening with the price of oil. rising all day today as well as yesterday. as it turns out, at least on the s&p, nine of the top 10 stocks are in the oil sector. let's take a look at what's happening with the dow as well, intraday. it's been a pretty hilly ride for most of the day up until right now. we saw a session high at around

10 a clock a.m., only to drop out at around noon. we are definitely clawing back here. we are up by about 1% or so. at session high, we were up by 16 153 and change. with the dragon we did see early this morning, let's take a look at some of the stocks and what has actually been happening. is down bypress, more than 12%. this is its biggest fall since the financial crisis. the reason for that is because its fourth-quarter profits fell 38%. some of the reasons include a loss link up with cosco, one of its biggest cobranded partners, along with a stronger dollar. for ge, it missed 24 sales estimates 33 $20 billion versus 35.9 billion -- $33.9 billion. falling to the lowest price and more than five years. alix: thank you, ramy inocencio. what are your odds of becoming a millionaire?

a lot of that depends on your race. an analysis conducted by the st. louis fed at the request of bloomberg news found the color of your skin more than any other demographic characteristic is dominant in determining your net worth. for more, want to bring in victoria stillwell. she joins us now. how did they go about quantifying that? emmons pulllliam data from the federal reserve survey of consumer finances. ons amazing trove of data household balance sheet is, what kind of assets they are holding, etc.. they have data on about 12,500 households. from there, they looked at different characteristics. age, race, and education. look at how many households in their samples were observed as millionaires. alix: today have reasons for why? why asians would be closer to being millionaires?

there are a lot of reasons. one just being that race can be a proxy for many other factors. unfortunately, it's a very good one. the things that might affect if all races, having different likelihoods of being millionaires include access to loans, home ownership, education, debt -- lots of different reasons that factor in. but also, let's not forget discrimination is still an issue. as a very classic study of researchers sending out resumes with black sounding names and white sounding names. the white sounding names get 50% more callbacks for interviews. alix: was there anyway to see how this is changed over the last few decades? unfortunately, we don't have that. what we can see is how a person's odds improve as they age, at least. but we know is that for asians and whites, their odds improve pretty well, actually. they start out closer to below

5%, and they get to around 20% for asians and whites. for hispanics and blacks, is a much bleaker picture. 1%, ands out less than only tops out at about 2% or 3%. alix: a fascinating study, and kind of depressing. but adjusting inside. thank you, victoria stillwell of bloomberg businessweek. coming up on "bloomberg markets," is a friday in the agreement as equities and oil surges. one of the best ways in a top disturbing market. ♪

alix: welcome back to "bloomberg markets." i'm alix steel. stock markets rallied, boosted by oil prices in hopes of more stimulus measures by centrally. the rising shares comes the end of a very turbulent week for the markets, for investors worried about slowing chinese economy and promoting -- plummeting

crude prices. our next guest says the bottom is in sight. one of the best investments in such a volatile market? christopher joins us now. how do you come in this kind of market, determine what is the bottom? christopher: anyone who's done this for a while knows you can't be sure. , checku do is stay calm your research again, and you buy companies that will make it through, whether the bottom is .own 5%, 10%, or 20% we can see it from here. alix: are you looking in certain sectors or as a company by company? it's mostly company by company. but we like refining, for example. refiners are the middle man of oil. they don't bear the risk of the price of oil. when oil is low, people by more gasoline.

refiners have increased demand when oil is low. alix: typically, refiners have done really well when the difference between debbie g.i. and read was really wide. in essence, you would buy for cheap and sell for higher. that spread has come in, we would chart on that. we are pretty much at parity. due to finders lose a boost -- do refiners lose a boost? christopher: with the dollar 70 gas, all of a sudden you are filling up your car. employment is a roughly correlated to gasoline usage. while that advantage is gone, there are two more. one is demand, the other is low natural gas prices are still here to stay in the united states. that gives our refiners advantage competing against other refiners overseas that have high natural gas prices. alix: you are stockpicking, looking for a bottom to form at some point. i was talking to jeff currie of goldman sachs, the head of commodities. oil over theo $40 next six to nine months. a lot of volatility.

do you see that, does that get reflected into equities? thattopher: i would share opinion. we think below $30 oil is unsustainable looking at a few years. for folks like us, how can we not look at the fallen angels of the energy sector? the problem is, some of them has to go out of business. in the market is kind of telling you which ones those are. we are sticking to investment-grade companies, and since we, like everybody else, doesn't know when the bottom is, we are going in slowly. ofx: part of what is held u.s. equities as well as the us economy has been the strength of the job market. if you come inside the bloomberg terminal, i have charted the vix.s -- the initialspike in jobless claims and what seems to be concerning some is the recent vix and both the initial jobless complaints. do you see this is a risk?

customer: you have to be foolhardy not to think one of the big risks the market is afraid of is a recession in the next six to nine months. we all think that's the likelihood. but it could happen. so what we do was we managed for companies that even if we are wrong and there is a recession, can come through that. the vix is telling you, or jobless claims are telling you may be there is. but they predicted nine of the last two recessions. so you're not quite sure. alix: where with the defensive names be? christopher: we like the large money center banks would be interest in here. the reason is, unless you get into real credit problems, 2009 was going through the ringer. really straightened out this balance sheets. you can get high-quality names like jpmorgan at eight or nine times with a think they learn. another defensive area would really be companies that are supplying consumers.

we actually like retail here. even if you have a recession, with a double be driven by capital spending and oil. the consumer is just wanted to come back. we like ralph laurent, for example, down 45% in 2015. that could do pretty well, even a slightly recessionary environment. reconcile that the saving rate has gone up and it jobless claims are taking up? say we wishrs would the consumers would save more. finally they are doing it and we are upset about it. gas prices of dropped so much, there is more disposable income, and the consumer, instead of spending it like us investors will like them too, they are saving part of it. they are making their balance sheet better. in the long run, that's a good thing. in the short run, we have to redo our numbers for slightly less retail sales. and he basically it's a good thing, just as oil prices are a good thing looking long-term. alix: the other thing that propped up the market has been buybacks.

i've charted the s&p by mag index, which is that white line versus the s&p index, the green line. i got to say, over the last few weeks, we've really seen the s&p start outperform buybacks. the idea that investors don't necessarily want the buyback story. what do you think? christopher: i think that's an aberration. historically, investors of loved buybacks. is of the screens we do disappearing companies, companies that are buying back so much of the stock. interestingly, another group we like our airlines. american airlines buyback on 50% of their companies. alix: thank you. chris grisanti. coming up, billionaire george soros. ♪

david: it's 3:00 a.m. in hong kong, welcome to "bloomberg markets."

from bloomberg's world headquarters in new york, good afternoon, i'm david bureau. .- david gura the s&p 500 headed for its first weekly gain this year. oil has seen the biggest rally in seven years, but a measure of volatility in crude futures is also a multiyear high. joining me to make sense of all this market volatility is mike buchanan, one of the world's biggest fixed income managers. let's head to the markets desk with ramy inocencio and a look at the latest. ramy: markets are headed back up to such an highs were we were earlier this morning. a second look at the numbers. nearly 2% higher for the s&p 500, the dow is up by 1.25%, the nasdaq up by 2.5%. looking at the dow, we had been out by 16 135, now we are not too far off for